China Challenges United States for Aerospace Leadership

I mentioned earlier some of my quibbles with Professor Joseph Nye on the likelihood of continued American preponderance. Actually, my quibbles are even smaller than quibbles, if quibbles can be quantified. Mostly, our massive fiscal deficits are upsetting, and I'm hoping to have something to say on "American Profligacy and American Power," by Roger Altman and Richard Haass. But I have to admit I was caught off guard by this report at LAT, "China to Unveil Its Own Large Jetliner":

China is aiming to reshape the global aviation industry with a home-grown jetliner, a direct challenge to the supremacy of Boeing and Airbus, the world's only manufacturers of large commercial aircraft.

The communist government has staked billions of dollars and national pride on the effort. What may surprise some Americans worried about slipping U.S. competitiveness is that some well-known U.S. companies are aiding China in its quest.

That partnership will be on display next week at an air show in southern China with the unveiling of a full-scale mockup of the C919. Slated for production by 2016, the 156-seat, single-aisle passenger plane would have its fuselage emblazoned with Comac, short for the state-owned Commercial Aircraft Corp. of China. But inside, the most crucial systems would bear the trademarks of some of the biggest names in Western aviation.

Honeywell International Inc. will supply power units, on-board computing systems, wheels and brakes; Rockwell Collins Inc. will handle navigation systems; GE Aviation is building the avionics; Eaton Corp. is involved with fuel and hydraulics; and Parker Aerospace of Irvine is responsible for flight controls. Powering the aircraft will be two fuel-efficient engines built by CFM International, a company co-owned by GE and French conglomerate Safran.

Global supply chains are common in the aviation industry: Chicago-based Boeing and Europe's Airbus rely on parts makers and assembly operations around the world. But China isn't content just to buy sophisticated gear for the C919; the government has required foreign suppliers to set up joint ventures with Chinese companies.

That has put U.S. and European suppliers in a tough spot: Be willing to hand over advanced technology to Chinese firms that could one day be rivals or miss out on what's likely to be the biggest aviation bonanza of the next half a century. Honeywell alone has snagged contracts worth more than $11 billion for the project.

"You're faced with either being part of it or not," said Billy Lay, a Dubai-based partner at PRTM, an international consulting firm with expertise in aerospace. "I don't know what the alternatives are."

Actually, we've dealt with such scenarios before, when Americans were concerned with growing Japanese industrial competitiveness in the late-1980s (see, "Beyond Mutual Recrimination: Building a Solid U.S.-Japan Relationship in the. 1990s," and "Do Relative Gains Matter? America's Response to Japanese Industrial Policy"). Back then, the U.S. response was to place export controls on sensitive industrial sectors, especially in aerospace. I can't imagine in just twenty years that kind of realpolitik in economic policy (neo-mercantilism) has been completely repudiated at the top levels of strategic planning. Perhaps Japan was more brazenly competitive, or China's more stealthy now. Either way, concerns for relative gains contributed to restrictions on sensitive technologies, and limits on private sector exports and cooperation in strategic technologies.

Maybe we're complacent. But we're still on top, at least for now. See, "Asia and Europe Giving U.S. Science a Run for the Money":

The United States still leads the world with its scientific clout, armed with highly respected universities and a big war chest of funding, but Europe and Asia are catching up, according to a Thomson Reuters report released on Friday.

The U.S. emphasis on biological and medical sciences leaves the fields of physical sciences and engineering open to the competition, the report finds.

"The United States is no longer the Colossus of Science, dominating the research landscape in its production of scientific papers, that it was 30 years ago," the report reads.

"It now shares this realm, on an increasingly equal basis, with the EU27 (the 27 European Union members) and Asia-Pacific," adds the report, available at http://researchanalytics.thomsonreuters.com/grr/.

I'll be back to this topic soon. President Obama was just in the news last week with the statement that America's best days were behind us: "Obama Acknowledges Decline of U.S. Dominance." The president is post-American anyway, but the matter's worth paying attention to. As noted, I'm mostly with Joseph Nye above. But extreme levels of deficit and debt, and now with new signs of threatening international economic competition, look to be putting tremendous pressure on the continuation of American world leadership.

More later ...